ORAL JUDGMENT:

None for the Petitioner. The learned counsel appearing for the Respondent-Bank makes statement that the parties have settled the matter and therefore, probably the petitioner is not appearing in the matter. Even otherwise, except the Petitioner who is a principal borrower, no one appeared before the Arbitrator. Therefore, the order was passed against them. The Petitioner admitted the claim and also the defaults. The finding has been given about the consistent defaults.

2 The Arbitrator while passing the award has directed as follows:-

“3. The Disputant Bank is directed to serve this order upon the Employer of the Opponents to recover its dues, failing which, the same be recovered as arrears of land revenue from the employer personally.

4. Manager of Recovery Department of the Disputant Bank is hereby appointed Receiver with all powers under O 40 R 1 Civil Procedure Code 1908 to implement the Award and Report.

5. The Receiver is hereby directed to attach and take possession of the hypothecated Stock and Books Debts and LIC Policies and other personal properties of the opponents and sell the same in public auction and adjust the sale proceeds of the same towards the awarded amount.”

3 The arbitrator was appointed by the Registrar as dispute was raised by the Respondent, under Section 84 of the Multi-State Cooperative Societies Act, 2002 (for short, MSCS Act). Such arbitration proceedings are governed by the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act).

4 Under the Arbitration Act as well as, the MSCS Act there is no provision, whereby the Arbitrator can issue such directions against any employer with regard to the dues of the employees (the Petitioner); there is also no provision whereby, the Arbitrator is permitted to direct to recover the debt as arrears of land revenue from the employer personally in case of default of the employees, except following the due procedure of enforcement of the award. This is totally beyond the jurisdiction and is impermissible. The appointment of Receiver in such fashion, at this stage, and such directions while passing the award under Order XL, Rule 1 of the Code of Civil Procedure (for short, CPC) is also impermissible. The Manager of Recovery Department of the bank cannot be directed to recover the amount or execute the award in such fashion.

5 Section 83, 84(3), 96 of the MSCS Act and Rule 30 of the Malti-State Cooperative Societies Rules, 2002 (for short, MSCS Rules) are reproduced as under:-

“Section 83 of MSCS Act-Repayment, etc.

(1) If in the course of an audit, inquiry, inspection or the winding up of a multi-State cooperative society, it is found that any person, who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to this Act, or the byelaws or has caused any deficiency in the assets of the society by breach of trust or willful negligence or has misappropriated or fraudulently retained any money or other property belonging to such society, the Central Registrar may, of his own motion or on the application of the board liquidator or any creditor inquire himself or direct any person authorised by him, by an order in writing in this behalf, to inquire into the conduct of such person within a period of two years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up, as the case may be; Provided that where the Central Registrar is satisfied that such inquiry could not be commenced during the period of two years aforesaid on account of fraud or concealment of facts, he may make or direct the inquiry to be made within such period not exceeding six years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up, as he thinks fit.

(2) Where an inquiry is made under subsection (1), the Central Registrar may, after giving